allotment of shares

Posted on 31-03-2016
By ADMIN

allotment of shares
What is Allotment of Shares?
capital market and securities law cs executive and professional notes---
Meaning: It means an appropriation of a certain number of shares to an applicant in response to his application for shares. Allotment means distribution of shares among those who have submitted written application.
Procedures regarding Allotment of Shares:
(1) Fulfillment of statutory conditions which need to be fulfilled: The company secretary has to see that the statutory conditions regarding the allotment of shares are fulfilled before the Board proceeds to allot the shares.
The following are the statutory conditions which need to be fulfilled:
(i) Valid offer and acceptance: There should be a valid offer and acceptance for the allotment to be a valid one. Here the company is the offertory and the acceptors are the general public. If there is no company to offer then there would be no public to accept.
(ii) Unconditional Allotment: The allotment must be absolute and unconditional and also as per the terms and conditions mentioned in the application. The allotment should be unbiased, and not according to the caste, creed, religion. It is not that rich shareholders pay more on the shares and the poor share holders pay less on the shares. All have to pay the same price on the shares.
(iii) Collection of minimum subscription amount: The minimum subscription amount as noted in the prospectus has been received within 120 days of the issue of prospectus.
(iv) Receipt of application money: Not less than 5% of the nominal value of the share has been secured and has been received along with the applications.
(v) Deposition of application of money in a scheduled bank: All application money received along with the applications must be deposited